GIFT  OF 

President 's   Office 


III  nir, 


ANALYSIS  OF  THE 

CHINA -JAPANESE 

TREATIES 


Their  Bearing  on  American  Interests 


D 


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0 


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GEO.  BRONSON  REA, 

Publisher  of 
♦'  The  Far  Eastern  Review  " 


TO  THE  UNIVEBSITV 


II 
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D 

D 


ANALYSIS  OF  THE 

CHINA-JAPANESE 

TREATIES 


Their  Bearing  on  American  Interests 


GEO.  BRONSON   REA, 

Publisher  of 
"  The  Far  Eastern  Review  " 


'3("i> 


^> 


ANALYSIS    OF    THE    TREATIES. 


Their  Bearing  on  American  Interests 


"The  difficulty  between  China  and  Japan  has  been  peacefully 
settled,  and  with  the  signing  of  the  Treaties  and  exchange  of 
Notes,  the  matter  ceases  to  be  of  immediate  public  interest.  It 
is  a  closed  incident."  This  seems  to  be  the  concensus  of  opinion 
in  the  United  States.  The  fact  remains  nevertheless  that  the 
real  trouble  has  not  yet  commenced.  By  the  signing  of  the 
Treaties,  an  issue  has  been  created  for  the  United  States,  on  a 
par  in  importance  with  larger  questions  affecting  our  rights  aris- 
ing out  of  the  European  war.  American  rights  have  again  been 
ignored  and  swept  aside  by  the  application  of  ]\Iight  to  a  defense- 
less nation. 

When  Japan  presented  twenty-one  demands  to  the  Chinese 
Government  last  January,  and  the  facts  leaked  out,  Japan  assured 
the  Powers  that  it  was  all  a  mistake,  and  that  only  eleven  de- 
mands had  been  presented,   and  pointed  an  accusing  finger  at 

^Germany  as  the  author  of  the  libel  on  her  good  intentions. 
Count  Okuma  cabled  reassuring  messages  to  America,  that  the 
treaties  would  not  be  impaired,  and  to   rely  in  Japan's  honor 

]not  to  take  any  unfair  advantage  of  China.  The  reports  from 
Peking  were  strenuously  denied,  and  America  invited  to  believe 
only  the  cables  from  Tokio. 

It  was  not  until  May  7th,  when  the  Japanese  Government  re- 
leased its  official  version  of  the  demands  and  the  negotiations 
leading  up  to  the  ultimatum,  that  the  world  was  given  the  first 
authoritative  account  of  the  trouble  by  one  of  the  principals. 
This  statement  fully  corroborated  the  reports  which  had  emanated 


313220 


1/ 


from  Peking,  admitting  the  existence  of  twenty-one  demands, 
and  condemning  Japan  out  of  her  own  mouth.  On  May  16th, 
the  following  Note  from  the  American  Government  was  delivered 
to  the  Chinese  Government  by  the  American  ^Minister  at  Peking: 


A 


''In  view  of  the  circumstances  of  the  negotiations  which 
have  taken  place  or  which  are  now  pending  between  the 
Government  of  China  and  the  Government  of  Japan  and 
the  agreements  which  have  been  reached  and  as  a  result 
thereof,  the  Government  of  the  United  States  has  the  honour 
to  notify  the  Government  of  the  Chinese  Republic  that  it 
cannot  recognize  any  agreement  or  undertaking  which  has 
been  entered  into,  or  which  may  be  entered  into  between  the 
Governments  of  China  and  Japan  impairing  the  treaty  rights 
of  the  United  States  and  its  citizens  in  China,  the  political 
or  territorial  integrity  of  the  Republic  of  China,  or  the  inter- 
national policy,  commonly  known  as  the  Open  Door  policy." 

An  identical  Note  was  handed  to  the  Japanese  Govern- 
ment through  the  American  Legation  at  Tokio. 

The  thought  at  once  arises;  if  Japan's  demands  did  not  impair 
American  rights  under  the  existing  treaties,  why  should  the 
pacific  and  friendly  American  Government  feel  constrained  to 
issue  such  an  unmistakable  warning  to  both  Governments?  The 
terms  of  the  ultimatum  with  only  minor  and  immaterial  changes, 
were  nevertheless  embodied  almost  in  their  entirety  into  two  treat- 
ies and  several  supplementary  Notes,  and  China  was  compelled 
to  bow  to  the  might  of  superior  force  and  affix  her  signature  to 
these  impairments  of  her  sovereign  rights.  But  before  doing  so, 
the  Chinese  Government  broke  the  silence  imposed  on  it  at  the  out- 
\  set  of  the  negotiations  by  Japan,  and  laid  its  case  before  the  world 
fn  an  official  communique  dated  May  7th.  The  concluding  para- 
graph of  this  simple  and  dignified  statement  of  facts,  should  be 
carefully  read,  as  it  outweighs  all  the  arguments  and  sophistries 
advanced  by  Japan  to  justify  her  actions. 

'Tt  is  plain  that  the  Chinese  Government  proceeded  to  the 
fullest  extent  possible  to  make  concessions.  In  considering 
the  nature  of  the  course  they  should  take  in  reference  to  the 
ultimatum,  the  Chinese  Government  was  influenced  by  its 
desire  to  preserve  the   Chinese  people,  as  well  as   a  large 


number  of  foreign  residents  in  China  from  unnecessary- 
suffering,  and  also  to  prevent  the  interests  of  other  friendly 
Powers  from  being  imperilled." 

For  these  reasons  the  Chinese  Government  was  constrained 
to  comply  in  full  with  the  ultimatum,  but  in  complying,  the 
Chinese  Government  disclaims  any  desire  to  associate  itself 
with  any  revision  which  may  thus  be  effected  in  the  various 
conventions  and  agreements  concluded  between  other  Powers, 
with  respect  to  the  maintenance  of  China's  territorial  inde- 
pendence and  integrity,  the  preservation  of  the  status  quo, 
and  the  principle  of  equal  opportunity  for  the  commerce  and 
industry  of  all  nations  ''in  China." 
The  above  is^  clear.     China   accepted  humiliation  to  preserve 
the  lives  and  properties  of  the  large  number  of  foreigners  through- 
out the  country,  at  a  time  when  their  own  Governments  were 
powerless  to  protect  them.     Reading  between   the  lines   of  the 
American   Note  and  the   closing  words   of   the   Chinese   official 
communique,  there  can  be  only  one  intelligent  interpretation  of 
the  situation.     Recognizing  that  its  treaty  rights  were  imperilled, 
and    China's    political    and    territorial    integrity    menaced,    the 
American  Government  placed  itself  squarely  on   record  that  it 
could  not  be  a  silent  witness  and  a  willing  accomplice  to  this 
Oriental  triumph  of  brute  force  over  right  and  meekness.     The 
Chinese  Government  has  plainly  stated  to  the  world  that  it  was 
overawed  by  the  superior  might  of  Japan,  and  compelled  under 
threat  of  war  to  comply  in  full  with  the  latter's  behests,  and  at 
the  same  time  disclaiming  any  intention  of  being  a  willing  associ 
ate   in   the   impairment   of   established   treaty   rights   of   othe 
America  notified  China  and  Japan  of  her  determination  to  retain 
all  her  rights  under  these  treaties,  and  China  has  announced  that 
if  these  or  other  rights  are  impaired,  Japan  is  solely  responsible. 

If  there  is  no  impairment  of  previous  treaties  in  the  new 
arrangements  between  China  and  Japan,  there  can  be  no  just 
reason  for  criticism,  or  future  interference  of  other  Powers. 
But,  if  on  analysis  these  documents  bear  evidence  to  the  contrary, 
it  would  seem  that  a  very  clear  and  decided  issue  had  been  cre- 
ated, which  other  Powers  must  take  notice  of,  or,  if  it  is  shown 
that  American  rights  have  been  infringed  or  ignored,  the  day 
cannot  be  long  deferred  before  the  facts  are  brought  forcibly  to 
the  attention  of  the  people  and  the  Government. 


China  has  placed  the  other  Powers  under  a  deep  obHgation  for 
her  forbearance,  and  practical  acceptance  of  those  principles  of 
meekness  so  ardently  preached  by  our  leading  peace  and  anti- 
armament  advocates.  China  accepted  humiliation  in  order  to 
preserve  the  lives  of  her  own  peaceful  people  and  the  thousands 
of  foreigners  who  reside  within  her  borders.  She  has  placed 
her  case  in  the  hands  of  those  friendly  Powers  whose  interests 
she  sought  to  protect.  When  the  time  arrives  for  the  settlement 
of  these  matters  involved  in  the  preservation  of  the  rights  and 
liberties  of  the  smaller  and  weaker  states,  the  Supreme  Court  of 
Civilization  will  be  called  upon  to  give  solemn  consideration  to 
j  the  facts  of  the  last  four  months.  If  Japan  has  taken  any  un- 
fair advantage  of  the  situation  to  obtain  for  herself  special  privi- 
leges in  China,  at  a  time  when  the  Guarantors  of  China's  integrity 
/j  were  powerless  to  prevent  her,  the  treaties  wrung  by  force  from 
U  China,  will  in  justice  to  others  have  to  be  abrogated. 

Have  the  rights  of  others  been  impaired?  I  shall  endeavor  to 
prove  that  they  have,  and  that  a  grave  issue  has  been  created 
for  America  as  the  result  of  Japan's  indifference  to  the  rights 
of  others. 

INTERNATIONAL    ETHICS    INVOLVED. 

In  analyzing  the  clauses  of  the  Shantung  treaty,  it  would  seem 
that(if  the  right  of  Might  and  retention  of  stolen  property  is  an 
accepted  principle  of  international  la\V,  then  no  third  party  has 
any  claim  to  concern  itself  over  the  transfer  of  German  privileges 
in  Shantung  to  Japan  or  any  other  nation.  The  Powers  made  no 
direct  protest  against  Germany's  enjoyment  of  the  fruits  of  her 
inglorious  raid  on  China.  It  would  be  manifestly  unfair  there- 
fore to  discriminate  and  object  to  Japan's  occupancy  of  Shantung. 
China's  viewpoint  is  never  considered,  especially  amongst  a  cer- 
tain element  in  America,  whenever  any  discussion  arises  as  what 
is  best  for  Japan,  and  in  this  particular  vital  matter,  it  is  taken  for 
granted  that  she  ought  to  be  delighted  and  pleased  at  Germany's 
defeat  and  Japan's  inheritance  of  the  latter's  rights.  China's 
viewpoint  is  that  her  own  special  interests  are  best  preserved  by 
a  continuance  of  the  status  quo,  in  harmony  with  the  declared 
terms  of  the  Anglo- Japanese  Alliance.  After  her  sad  experiences 
in  Manchuria,  and  the  indignities  heaped  upon  her  by  her  strong- 
armed  little  neighbor,  is  it  unreasonable  that  China  should  view 


with  grave  apprehension  any  further  extension  of  Japan's  spheres 
of  special  influence? 

Because  Germany  compelled  China  by  superior  might  to  cede 
certain  territories  and  special  privileges  in  Shantung,  it  does  not 
follow  that  the  Chinese  accept  the  perpetuation  of  this  principle 
by  any  victorious  enemy  of  Germany,  and  especially  one  who  has 
brutally  ignored  China's  rights  in  the  past  and  compelled  her  to 
apologize  and  pay  indemnities  on  the  slightest  provocation  or 
pretext.  If  Germany's  policy  of  the  "Mailed  Fist"  first  applied 
to  defenseless  China,  is  open  to  severe  condemnation,  it  follows 
as  a  matter  of  honest  deduction  and  logic  that  any  Power  who 
aspires  to  succeed  to  the  fruits  of  this  iniquitous  policy,  and  em- 
ploys the  identical  methods  to  achieve  its  purpose,  places  itself 
on  the  same  level  as  Germany,  and  is  open  to  the  same  severe 
criticism'  and  condemnation.  China  was  robbed  by  Germany, 
Japan  attacked  the  robber  and  acquired  temporary  enjoyment  of 
the  spoils,  and  insists  on  retaining  ownership.  Because  the  right- 
ful owner  remonstrated  and  requested  restitution  of  the  stolen 
property,  in  conformity  with  Japan's  promises,  the  latter  pro- 
fessed to  be  insulted  and  employed  this  pretext  to  enforce  recogni- 
tion to  her  possession  of  the  stolen  goods.  Stripped  of  all  diplo- 
matic and  superfluous  verbiage,  this  simple  statement  reduces  the 
situation  to  its  lowest  terms. 

Germany  has  been  held  up  to  universal  execration  for  the 
methods  employed  by  her  in  grabbing  Kiaochao  from  China  and 
emplanting  herself  in  Shantung.  Japan  refuses  to  admit  that 
China  has  any  further  voice  in  the  disposition  of  her  stolen 
property,  and,  by  applying  the  same  methods  as  employed  origin- 
ally by  Germany,  has  compelled  defenseless  China  to  recognize 
the  transfer  of  Germany  privileges.  It  is  true  that  Japan  has 
promised  to  restore  Kiaochao  to  China,  but  there  is  no  indication 
as  yet  that  she  has  any  intention  to  forego  the  valuable  com- 
mercial clauses  embraced  in  the  lease.  It  is  impossible  to  apply 
one  code  of  international  ethics  to  Germany,  and  another  to  Japan 
when  the  conditions  are  identical. 

The  Japanese  are  resentful  of  any  American  criticism  of  their 
present  actions,  and  seek  to  find  therein  a  special  prejudice 
against  their  country.  They  assume  that  we  ought  to  be  glad 
that  Germany  has  been  driven  out  of  Shantung,  and  feel  aggrieved 
that  we  should  in  any  way  question  their  honorable  motives. 


Although  no  other  Power  uttered  an  open  protest  against 
Germany's  high-handed  outrage  in  1898,  it  was  this  particular 
event  which  determined  the  American  Secretary  of  State  to  dis- 
patch the  Open  Door  invitations  to  the  various  Powers  concerned. 
While  this  was  not  a  specific  protest  against  Germany's  actions, 
it  placed  the  American  Government  firmly  on  record  that  it  dis- 
approved of  these  strong  armed  seizures  of  China's  territory.  If 
we  disapproved  at  that  time  and  adopted  measures  to  obviate  any 
further  infractions  of  China's  sovereign  rights  and  integrity,  and 
have  on  many  subsequent  occasions  reiterated  our  adherence  to 
these  fundamental  principles,  it  follows  that  America  cannot 
stultify  herself  at  this  time,  by  making  a  special  dispensation  in 
favor  of  Japan,  and  subscribing  to  the  perpetuation  of  a  policy 
which  menaces  the  future  of  China  and  American  rights  in  thalx 
country.  Germany  was  wrong  in  1898,  and  America  refused 
to  condone  the  wrong.  She  cannot  reverse  her  attitude  in  1915 
by  upholding  Japan. 

If  this  reasoning  applies  to  the  situation,  and  if  China's  prop- 
erty is  to  pay  the  expenses  of  Japan's  war  with  Germany,  it 
would  again  seem  reasonable  and  fair  that  China  as  the  most 
interested  party  should  be  permitted  to  nominate  a  representative 
to  take  part  in  any  Peace  Negotiations  having  in  view  the  dis- 
position of  her  rights.  Due  to  the  intricacies  of  modern  inter- 
national finance,  the  questions  involved  in  any  transfer  of  Ger- 
many's rights  in  Shantung  to  Japan,  create  many  new  and  com- 
plex problems,  and  compel  the  signing  of  a  treaty  at  the  expira- 
tion of  the  war  between  Germany  and  Japan,  quite  distinct  and 
apart  from  any  general  European  settlement. 

j  The  existence  of  the  Anglo-Japanese  Alliance,  and  the  invoca- 
I  tion  of  its  provisions  as  the  justification  for  Japan's  entrance 
j  into  the  war  would  appear  to  make  Britain  equally  responsible 
I  with  Japan  for  China's  plight.  This  in  turn  would  indicate 
(  that  Britain  should  participate  in  any  final  settlement  after  the 
I  war,  and  herein  lies  China's  one  great  hope  of  eventual  justice 
J  being  meted  out  to  her. 

These  fundamental  questions  of  right  and  wrong  must  be 
grasped  before  any  intelligent  analysis  of  the  new  treaties  can 
be  attempted,  and  their  bearing  on  American  interests  explained. 
We  can  now  proceed  to  indicate  where  the  very  first  clause  in 


the  Shantung  Treaty  conflicts  with  American  ideas  of  right  and 
wrong,  shatters  the  last  hope  of  a  ''square  deal"  for  China,  and 
creates  future  trade  difficulties  for  our  merchants. 

CREATION  OF  SPHERES  OF  INFLUENCE. 

How  Germany  obtained  from  China  in  1898  the  99  year  lease 
of  Kiaochao  and  special  privileges  in  the  Province  of  Shantung, 
by  penalizing  China  for  the  murder  of  two  German  missionaries, 
is  an  old  story,  always  cited  as  the  first  application  of  the  "Mailed 
Fist"  policy.  In  the  present  state  of  world  opinion,  this  incident 
is  invariably  employed  as  illustrative  of  her  high-handed  methods, 
but  the  fact  seems  to  be  overlooked  that  it  was  inspired  by 
Britain's  occupation  of  Hongkong,  the  French  success  in  com- 
mitting China  to  the  non-alienation  of  Hainan  Island  in  March 
1897,  Britain's  erection  of  a  ringed  fence  around  the  Yangtsze 
Valley  in  February  1898,  and  Russia's  intrigues  to  secure  posses- 
sion of  PorL.Arthur.  These  dates  must  be  borne  in  mind,  for 
it  was  not  until  March  6th,  1898,  that  the  Kiaochao  Convention 
was  signed.  Germany's  proclaimed  intentions  in  regard  to  Shan- 
tung, impelled  Britain  to  demand  the  non-alienation  of  the  Yang- 
tsze Valley  the  month  previous.  France  followed  by  obtaining 
a  non-alienation  declaration  covering  South  China  on  April  10. 
Eight  days  later,  Britain  already  established  at  Weihaiwei,  in- 
formed Germany  that  she  would  respect  the  latter's  rights  in 
Shantung,  and  the  week  following  Japan  staked  out  her  claim 
to  Fukien.  On  June  9th,  Great  Britain  obtained  the  extension 
to  her  Hongkong  Territory,  and  on  July  1st,  the;  lease  of 
Weihaiwei.  It  is  of  special  interest  to  Americans  to  note  that 
the  spoilation  of  China,  occurred  at  a  time  when  the  attention  of 
this  country  was  diverted  to  our  troubles  with  Spain,  and  we 
were  powerless  to  intervene.  It  is  also  apparent  that  it  is  difficult 
.  to  single  out  any  particular  Power  for  special  condemnation  as 
they  were  all  equally  guilty.  It  remained  however  for  Germany 
to  claim  the  inglorious  distinction  of  being  the  first  Power  to  in- 
corporate into  a  treaty  the  principle  of  exclusive  opportunity  in 
her  special  preserves.  This  appears  in  the  clause  of  the  Kiaochao 
Convention,  reading: — 

"The  Chinese  Government  binds  itself  in  all  cases  where 
foreign  assistance  in  persons,  capital  or  material  may  be 
needed  for  any  purpose  whatever  in  the  Province  of  Shan- 


10 

tung,  to  offer  the  said  work  or  supplying  materials  in  the 
first  instance  to  German  manufacturers  and  merchants,  and 
only  in  the  event  of  the  latter  declining  to  undertake  the 
performance  of  such  works  is  China  at  liberty  to  act  as  she 
pleases." 

This  clause  created  the  Province  of  Shantung  as  a  closed  Ger- 
man preserve,  and  inspired  other  Powers  to  take  action  in  de- 
fending their  own  special  interests  in  other  sections  of  China. 
It  was  this  clause  which  also  influenced  the  American  Secretary 
of  State  to  send  out  the  invitations  to  the  other  Powers  to  se- 
cure their  adherance  to  the  principle  of  equal  opportunity.  Not- 
withstanding Germany's  subscription  to  this  policy,  it  is  undeni- 
ably true  that  for  some  years  she  adhered  to  her  exclusive  privi- 
leges in  Shantung.  As  time  went  on  though  she  discovered  that 
the  Province  was  not  an  Eldorado,  and  that  the  clause  operated 
against  her  equal  participation  in  other  more  profitable  sections 
of  China.  She  then  began  to  display  a  desire  to  relinquish  these 
preferential  rights,  and  tentative  conversations  were  held  with  the 
Chinese  authorities  having  this  end  in  view.  Although  Germany's 
motives  were  eminently  selfish,  the  Chinese  viewed  this  tendency 
as  a  step  in  advance  towards  the  recovery  of  their  sovereign 
rights,  and  as  marking  a  disposition  on  the  part  of  Germany 
to  live  up  to  the  principles  of  the  Open  Door.  It  is  a  fact  not 
generally  known  that  in  later  years  Germany  was  willing  to  per- 
mit other  nationals  to  co-operate  in  the  development  of  the  prov- 
ince. The  German  Bank  invited  the  official  British  institution 
to  participate  on  equal  terms  in  the  floating  of  the  loan  for  the 
construction  of  the  Chefoo  Breakwater,  and  British  engineering 
firms  investigated  and  submitted  estimates  for  the  w^ork.  One 
of  the  most  prominent  American  engineering  concerns  was  also 
interested,  and  stood  an  .excellent  chance  of  being  awarded  the 
contract.  Americans  also  held  options  on  valuable  mining  prop- 
erties in  this  province.  I  mention  these  facts  merely  to  accentu- 
ate the  point  that  if  Japan  had  not  carried  the  war  into  China 
and  mcide  this  inoffensive  nation  pay  the  costs,  there  was  every 
*  reasonable  prospect  that  the  one  objectionable  clause  in  the  Kiao- 
chao  Convention  would  have  been  eliminated  with  profit  to  China 
and  the  rest  of  the  world.  China's  soverei^n_xights  would  have 
been  strengthened,  and  the  precedenT^rorexclusive  privilege 
expunged   from  the  treaties.     Japan's   succession   to   Germany's 


11 

rights  destroys  the  last  hope  that  China  will  ever  be  liberated 
from  these  provisions,  for  in  the  present  treaties  this  principle 
has  been  expanded  and  perpetuated  in  Mancliuria,  and  the  attempt 
made  to  extend  them  to  Fukien  and  apply  to  the  iron  and  steel 
industry  in  the  Yangtsze  Valley.  The  preservation  of  this  ob- 
noxious doctrine  was  vital  and  imperative  to  the  prosecution  of 
Japan's  designs  on  China. 

VIOLATION    OF   THE   "OPEN    DOOR." 

fif  Japan  has  demanded  and  obtained  from  China  exclusive  and 
"preferential  rights  in  Manchuria  it  is  conclusive  evidence  that 
she  will  not  feel  disposed  to  consent  to  any  surrender  or  modifica- 
tion of  these  same  privileges  in  Shantung.  The  principle  of 
exclusive  spheres  is  to  be  strengthened  and  perpetuated,  and  the 
doctrine  of  the  Open  Door  relegated  to  the  waste  paper  basket. 
It  is  in  this  respect  that  the  first  clause  of  the  new  treaty  con- 
stitutes a  menace  and  disregard  for  American  rights  and  interests. 

The  revival  of  the  "Spheres  of  Influence"  policy  by  Japan 
which  undermine  and  subvert  the  authority  of  the  Chinese  Govern- 
ment, and  tend  to  close  the  door  to  others,  sounds  the  death 
knell  to  the  Open  Door  doctrine.  The  American  Note  to  China 
and  Japan  states  in  no  uncertain  terms,  that  our  Government 
cannot  recognize  any  impairment  of  this  policy.  The  issue  is 
created.  It  exists  to  day  as  an  actual  force,  and  sooner  or  later 
must  be  faced.  The  only  guide  to  the  future  are  the  events  of 
the  past,  and  as  we  look  back  to  what  has  occurred  in  Korea, 
Manchuria,  and  in  Shantung  since  the  Japanese  assumed  control, 
and  then  consider  what  is  behind  Japan's  pretentions  in  Fukien, 
there  is  only  one  intelligent  deduction  to  make. 

AMERICA'S    WEAKNESS    INVITES    INSULT. 

True  to  her  traditions  America  has  sedulously  refrained  from 
claiming  any  ecoriomic  or  political  advantages  in  China,  and  since 
the  adoption  of  the  Open  Door  agreements  in  1900,  every  country, 
except  Japan,  has  adhered  in  principle  to.  the  doctrine  of  equal 
opportunity.  These  countries  have  however,  special  interests, 
bound  up  within  the  spheres  previously  outlined.  Important 
vested  interests  have  been  created  in  these  districts,  and  now  that 
Japan  has  re-established  the  "Spheres  of  Influence"  policy,  there 
is  grave  reason  to  fear  that  the  other  Powers  may  consider  it 


[ 


12 

necessary  to  follow  Japan's  example  and  protect  their  special  and 
vested  interests,  by  the  application  of  the  same  doctrine.  America 
would  then  be  completely  frozen  out  of  the  Republic.  If  Japan's 
/precedent  holds,  then  Russia,  Great  Britain  and  France  may  follow 
\suit,  especially  if  Japan  refuses  to  return  to  the  Open  Door.  The 
menace  to  America's  interests  behind  Japan's  actions  in  China  is 
therefore  real,  and  if  the  other  Powers  feel  that  they  are  so 
obligated  to  Japan  for  her  assistance  during  this  war,  and  side 
with  her,  America  would  be  compelled  to  meekly  accept  the  humili- 
ation and  bid  Good-Bye  to  dreams  of  future  profits  from  the  use 
of  the  Panama  Canal  through  participation  in  the  great  unde- 
veloped markets  of  Eastern  Asia.  And  if  our  rights  could  be  so 
easily  taken  from  us  in  China,  it  would  not  be  long  before  the 
same  tactics  would  be  employed  in  South  America.  As  the  ''Open 
Door"  Doctrine  has  been  swept  away  by  the  might  of  superior 
force,  so  would  the  Monroe  Doctrine  be  put  to  the  test.  The  in- 
fluence on  our  trade  with  South  America  arising  out  of  the  situa- 
tion created  in  China  merits  special  study  and  examination. 

THE  ALMIGHTY  DOLLAR  VERSUS  HONOR. 

There  is  a  marked  tendency  in  certain  American  circles  to 
concede  Japan's  right  to  establish  a  political  and  commercial 
supremacy  over  China,  based  on  the  assumption  that  our  trade 
with  the  latter  country  would  be  more  stimulated  and  benefitted 
by  co-operating  with  Japan,  using  the  merchants  of  this  country 
as  our  agents  or  go-betweens.  This  idea  also  embraces  the  finan- 
cial side  of  our  relations  with  China,  on  the  argument  that  Chinese 
loans  .would  be  safer  and  more  attractive  if  contracted  through 
Japan,  and  with  her  guarantee.  This  in  other  words,  is  the 
policy  advocated  by  Count  Okuma  when  he  assumed  office, 
and  which  has  been  insiduously  introduced  into  America  by  those 
allies  of  Japan  who  receive  their  inspiration  from  a  common 
source  in  Tokio.  This  argument  has  been  forcibly  advanced  by 
the  President  of  the  Japan  Society,  who  in  his  desire  to  have 
America  withdraw  from  the  Orient  and  permit  Japan  a  free  hand 
in  China,  defends  his  position  on  the  grounds  that  our  trade  with 
Japan  is  much  greater  than  with  China,  that  we  have  no  spheres  of 
influence  in  China,  and  that  our  natural  field  for  trade  expansion 
lies  to  the  south.  This  plea  for  Japan  outrages  all  ideas  of  honor 
and  asks  that  our  friendly  regard  for  China  be  sacrificed  on  the 


13 

altar  of  the  Almighty  Dollar.  Because  our  trade  will  perhaps 
benefit  as  the  result  of  China's  decline  into  a  Japanese  province, 
the  national  life  and  aspirations  of  this  long  sufifering  people 
must  be  blotted  out.  The  enormity  of  such  a  crime  against  a 
weak  and  defenseless  nation  struggling  manfully  through  a  tardy 
evolution  from  the  darkness  of  medievalism  into  the  light  of 
modern  thought,  handicapped  with  the  iron-clad  customs  and 
habits  of  centuries  and  the  aggressions  of  predatory  neighbors, 
is  utterly  un-American,  and  opposed  to  all  those  principles  on 
which  our  own  Government  is  founded.  The  idea  is  so  sordid 
and  base  that  it  could  never  have  emanated  from  the  mind  of 
any  true  American,  and  could  only  have  germinated  and  found 
root  in  a  soil  far  removed  from  the  influences  of  our  thought 
and  culture.  This  idea  of  abandoning  the  principle  of  equal 
opportunity  in  China  and  giving  a  free  hand  to  Japan  to  subju- 
gate the  country,  and  concentrating  our  commercial  energies  in 
South  America,  is  very  attractive  and  has  found  many  adherents 
amongst  those  who  value  trade  and  profits  higher  than  principle, 
and  who  have  given  no  thought  to  the  disturbance  of  those  world 
commercial  currents  caused,  as  a  result  of  the  recent  treaties. 

PENALTY   OF   DEFEATED    NATIONS. 

The  first  clause  of  the  Shantung  Treaty  is  obviously  based  on 
the  belief  that  Germany  is  to  be  completely  eliminated  from 
Shantung,  as  all  German  rights  in  this  province  whether  acquired 
by  treaty  or  otherzvisc  are  to  be  surrendered  to.  Japan.  When 
the  attitude  of^ Great  Britain  in  Hongkong  in  compelling  the 
liquidation  of  all  German  firms  in  the  colony,  and  the  general  tone 
of  the  British  press  and  public  utterances  of  high  officials  are  con- 
sidered, the  great  truth  is  borne  home  to  the  mind  of  the  neutral, 
that  the  complete  elimination  of  German  trade  and  influence  in 
China  must  be  accepted  as  one  of  the  cardinal  objectives  of  the  v 
present  struggle.'''  Japan  has  already  indicated  by  her  actions  in 
Shantung  and  the  South  Seas,  that  temporarily  at  least,  she  does 
not  intend  to  be  bound  by  the  principles  of  international  law 
covering  the  inviolability  of  private  property,  emphasizing  her 
determination  to  consider  as   spoils  of  war  all   German   rights 


V 


\ 


*On  June  25th,  a  British  Order  in  Council  prohibiting  any  further 
trading  with  enemy  firms  in  China,  Siam,  Morocco  and  Persia. 


14 

whether  acquired  by  treaty  or  individual  enterprise.  The  prin- 
ciple to  be  established  as  foreshadowed  by  Japan's  present  policy, 
is  that  a  defeated  nation  is  to  be  deprived  of  the  fundamental 
right  of  free  competition  in  the  markets  of  a  neutral  country. 
This  doctrine  ruthlessly  applied  by  a  victorious  Power,  constitutes 
a  terrible  punishment  for  any  nation  who  may  have  the  mis- 
fortune to  suffer  defeat  in  any  future  conflict,  and  invites  atten- 
tion to  the  bitterness  of  that  intense  struggle  for  existence  and 
commercial  advantage  which  lies  at  the  root  of  the  world's 
present  troubles. 

MENACE    TO    AMERICAN    TRADE. 

The  confiscation  of  all  German  commercial  and  other  rights  in 
Shantung,  and  the  declared  intention  of  the  Allies  to  uproot  and 
destroy  the  source  of  German  influence  in  China  and  drive  her 
commerce  from  this  neutral  market,  while  constituting  a  most 
praise-worthy  and  patriotic  object  for  her  enemies,  points  a 
moral  to  other  nations  and  should  be  subjected  to  close  scrutiny 
to  ascertain  its  ultimate  bearing  on  American  trade.  Although 
on  its  face  this  does  not  convey  any  threat  to  American  interests, 
yet  if  brought  under  examination  together  with  other  unmis- 
takable signs  of  the  times,  analysis  will  determine  that  American 
export  trade  must  inevitably  suffer.  It  does  not  require  any 
expert  knowledge  of  present  day  commercial  currents  to  grasp 
the  fact  that  if  German  trade  is  uprooted  in  the  great  markets 
of  China,  and  her  colonies  are  absorbed  by  the  victorious  Allies, 
and  the  home  markets  of  the  Allies  are  to  be  closed  to  her  in  the 
future,  Germany's  export  activities  will  be  concentrated  on  those 
neutral  markets  open  to  free  competition.  If  we  eliminate  China 
and  Tapan,  India,  Australia  and  the  best  part  of  Africa,  and  then 
bear  in  mind  that  the  home  countries  of  the  Allies  will  be  practi- 
cally barred  to  Germany  for  at  least  another  generation,  it  be- 
comes evident  that  the  only  great  field  that  will  remain  open  to 
her  unrestricted  commercial  activities  will  be  the  neutral  markets 
of  North,  Central  and  South  America.  The  logical  sequence 
therefore  to  Germany's  expulsion  from  the  markets  of  China 
and  those  under  the  control  and  influence  of  the  Allies,  will  be 
to  compel  the  concentration  of  her  remarkable  export  organiza- 
tions to  the  expansion  of  trade  in  Mexico,  Central  and  South 
America  in  direct  competition  with  the*  efforts  of  the  United 
States. 


15 

The  operation  of  the  new  tariff  law  compels  our  manufacturers 
to  get  out  and  seek  a  larger  share  of  the  export  business,  and 
the  initial  steps  have  already  been  taken  to  perfect  an  organiza- 
tion for  the  advancement  of  our  interests  in  South  America. 
Economic  conditions  in  the  United  States  make  imperative  this 
expansion  of  foreign  trade,  and  when  the  rush  of  war  orders  is 
over,  and  conditions  become  normal,  the  necessity  for  markets 
will  be  more  keenly  felt.  If  American  manufacturers  will  now 
pause  and  consider  that  the  recent  treaty  extracted  from  China 
by  Japan,  closes  the  door  to  their  future  activities  in  Manchuria 
and  Shantung,  and  revives  the  policy  of  the  "Spheres  of  In- 
fluence" in  China,  which  if  applied  by  the  other  Powers,  will 
freeze  them  completely  out  of  this  market,  they  will  begin  to  see 
that  the  effect  will  be  to  compel  them  to  concentrate  their  activi- 
ties in  building  up  trade  with  our  neighbors  to  the  South.  The 
operation  of  the  same  policy  will  drive  Germany  to  almost  ex- 
clusive activity  in  the  same  sphere,  so  the  result  of  Japan's 
actions  not  only  deprives  America  and  Germany  of  equal  oppor- 
tunity in  China,  but  forces  them  into  direct  competition  in  Central 
and  South  America. 

No  matter  what  the  ultimate  outcome  of  the  war  in  Europe 
may  be,  the  German  people  will  have  to  live  and  operate  their 
industries  and  factories,  and  be  conceded  the  right  to  trade  and 
compete  in  those  neutral  markets  of  the  world,  not  closed  to 
them  by  the  resentment  of  the  Allies.  With  the  full  force  of 
German  industrialism  directed  into  competition  with  America 
for  the  supply  of  the  South  American  markets,  our  manufacturers 
will  be  eventually  driven  from  the  field,  by  the  application  of 
the  same  business  methods  that  undermined  the  trade  supremacy 
of  Britain  in  her  own  special  spheres.  The  struggle  for  existence 
in  Germany  will  be  keen,  and  to  provide  work  for  the  masses, 
profits  will  be  reduced  to  a  minimum.  Against  such  a  competi- 
tion American  manufacturers  will  be  placed  under  a  great  dis- 
advantage and  their  export  trade  must  inevitably  suffer.  It  will 
thus  be  seen  that  the  very  first  clause  of  the  Shantung  treaty,  will 
tend  to  increase  the  trade  difficulties  of  America,  and  by  throwing 
America  and  Germany  into  direct  commercial  competition,  it  is 
certain  to  create  rivalries,  jealousies  and  ultimate  friction,  if  not 
an  open  attack  on  the  Monroe  Doctrine.  From  this  brief  obser- 
vation of  the  commercial  currents  set  loose  in  China,  it  would 


A 


I 


16 

seem  that  future  trouble  is  in  store  for  America.  If  we  permit 
Japan  to  work  her  will  on  China,  and  concentrate  our  energies 
on  South  America,  we  not  only  lose  our  footing  in  China,  but 
invite  disaster  nearer  home.  It  goes  without  saying  that  if  we 
adopt  the  policy  advocated  by  the  President  of  the  Japan  Society, 
and  entrust  our  interests  in  China  to  Japanese  Agents,  we  could 
never  hope  for  any  abandonment  of  principle,  and  American 
goods  would  again  be  subjected  to  discrimination  if  not  actual 
boycott. 

JAPAN  SOLIDIFIES  HER  CONTROL  OF  SHANTUNG. 

It  has  been  made  clear  how  the  provisions  of  the  new  Treaty 
between  China  and  Japan  nullified  the  principle  of  the  Open 
Door,  re-established  the  Spheres  of  Exclusive  Influence,  in  mani- 
fest disregard  to  the  position  of  America  and  also  the  ultimate 
effect  of  the  treaty  on  the  trade  of  America  with  China  and 
South  America.  We  can  now  turn  the  search  light  of  truth  on 
the  other  clauses  of  the  Shantung  treaty,  and  disclose  the  real 
working  of  that  Oriental  diplomacy,  which  has  been  hidden  be- 
hind a  cloud  of  high  sounding  phrases  of  amity  and  good  will 
to  the  rest  of  the  world.  A  peep  behind  the  scenes  will  disclose 
that  underneath  the  simple  looking  demands,  are  revealed  the 
well  laid  plans  of  Japan  to  solidify  her  hold  on  China,  and  loot 
the  revenues  of  the  Government  for  the  benefit  of  Japanese 
interests. 

The  first  supplementary  note  to  the  Shantung  treaty,  reads : — 
"Within  the  Province  of  Shantung  or  along  its  coast  no 
territory  or  island  will  be  leased  or  ceded  to  any  foreign 
Power  under  any  pretext." 
I     This  Note  is  a  modification  of  the  original  demands  that  China 
f  should  not  lease  or  cede  such  territories   to  any   third  Pozver. 
Even  in  this  matter  it  is  seen  that  Japan  endeavored  to  force  her 
way  to  exclusive  rights  and  privileges.     On  its  face,  this  clause 
would  seem  to  be  equitable  to  both  parties,  always  having  in  view 
Japan's   position.     Her   argument    for   presenting   and    insisting 
on  the  adoption  of  this  clause  was  the  usual  and  generally  ac- 
cepted doctrine  of  a  stronger  nation  imposing  its  will  on  a  weaker 
neighboring  country  to  protect   its  own  national   existence,  by 
I  obviating  any  possibility  of  another  Power  obtaining  a  foothold, 
^  which  might  conceivably  be  transformed  into  a  naval  base.     This 


17 

official  explanation  of  Japan  is  therefore  unchallengeable,  and 
corresponds  to  similar  American  policy  with  reference  to  the 
Latin  American  countries  to  the  south.  There  is  another  and 
more  subtle  aspect  to  this  clause,  which  compels  a  tribute  to 
Japan's  astuteness,  for  analysis  will  indicate  that  it  simply  serves 
to  strengthen  her  hold  on  the  province,  by  adhering  to  well 
established  and  accepted  precedents  of  1898  in  delimiting  her 
special  preserves.  Germany  overlooked  this  re-insurance  in 
drafting  the  lease  of  Kiaochao  and  installing  herself  in  Shantung, 
and  the  gate  was  always  open  for  China  to  lease  or  cede  another 
point  of  vantage  in  the  province  to  another  Power,  as  evidenced 

feby  the  lease  of  Weihaiwei  to  Great  Britain.     Japan  has  skillfully 

I  repaired  this  breach  in  the  ringed  fence,  that's  all. 

It  will  be  remembered  that  Great  Britain,  France  and  Japan 
extracted  from  China  in  1897  and  1898  the  so  called  Non-Aliena- 
tion Declarations  covering  their  respective  spheres  of  influence. 
These  engagements  definitely  delimited  these  spheres  set  apart  for 
the  special  interests  of  the  above  Powers,  while  Russia  in  turn  had 
marked  out  Manchuria  as  her  particular  "piece  of  the  Chinese  pie." 
These  Declarations  are  still  in  force  and  constitute  the  founda- 
tion of  the  British,  French  and  Japanese  pretensions  to  the 
Yangtsze  Valley,  South  China  and  Fukien.  Viewed  in  this  light, 
ihe  non-alienation  supplement  to  the  recent  treaty  respecting 
Shantung  simply  proclaims  that  Japan  is  adhering  strictly  to 
precedent,  and  is  leaving  no  loop  hole  for  others  to  break  into 
her  preserves.  It  is  self  evident  that  after  her  sad  experiences  /  / 
at  the  hands  of  her  ''friends,"  China  would  never  again  willingly  \  v 
consent  to  any  further  alienation  of  her  territories  by  lease  or  | 
otherwise,  and  as  far  as  she  was  concerned  this  provision  in  re-  ) 
gard  to  Shantung  was  uncalled  for  and  unnecessary.  Only  by' 
the  application  of  that  brute  force  employed  by  other  nations  in 
dealing  with  her,  can  China  be  separated  from  her  territories. 
The  only  apparent  justification  for  enforcing  this  additional 
humiliation  on  China,  rests  on  the  assumption  that  Germany  may 
at  some  time  in  the  future  compel  China  to  recompense  her  for 
the  loss  of  Kiaochao,  by  the  lease  of  some  other  port  or  island 
off  the  coast  of  Shantung,  which  in  turn  might  be  transformed 
into  another  naval  base.  As  there  are  no  other  ports  in  the 
province  or  islands  off  its  coast  suitable  for  such  purpose,  it 
deprives  this  argument  of  its  force,  and  reduces  the  meaning  of 


I 


J 


18 

the  clause,  to  a  set  determination  on  the  part  of  Japan  to  solidify 
^  her  hold  on  what  she  has  acquired.  The  non-alienation  clause 
•  respecting  Shantung  also  rounds  out  and  puts  the  finishing  touch 

on  the  series  of  these  undertakings,  and  leaves  no  corner  of 
j  China,  which  can  be  alienated.  Russia  in  Mongolia  and  North 
I  Manchuria,  Japan  in  South  Manchuria  and  Shantung,  Great 
I  Britain  in  Tibet  and  the  Yangtsze  Valley,  Japan  in  Fukien,  and 
f  France  in  South  and  Southwest  China  and  the  Island  of  Hainan, 
f  have  parcelled  the  country  between  them,  and  the  only  place  that 

China  might  of  her  own  free  will  cede  or  lease  territory  without 

coming  into  conflict  with  these  other  Powers,  would  be  in  the 

Metropolitan  Province  of  Chihli. 

THE   STORY    OF   LUNGKOW. 

We  can  now  turn  to  Clause  2  of  the  treaty  which  reads: 

'Tn  building  a  railway  connecting  Chefoo  or  Lungkow  with 
the  Tsingtau-Tsinanfu  line,  China  shall  apply  to  Japanese 
capitalists   for  the  necessary  loan,  provided  that  Germany 
relinquish  her  rights  regarding  the  Chefoo-Weihsien  Rail- 
way." 
When  this  is  considered  in  connection  with  Clause  1,  it  would 
appear  to  be  superfluous,  for  if  Japan  is  to  fall  heir  to  all  of 
Germany's  rights  in  the  Province,  why  such  anxiety  concerning 
an  enterprise  fully  covered  by  the  provisions  of  that  Clause?     If 
Germany,  under  the  provisions  of  the  Kiaochao  Convention  pos- 
sessed the  preferential  right  to  finance  this  line,  and  if  Japan 
is  to   succeed  to  these  privileges,  why  was  she  so  anxious  to 
specify  this  particular  concession,  and  have  it  super-guaranteed 
to  her  in  a  separate  clause  in  the  new  treaty?     Herein  rests  a 
story  eloquent  of  Japan's  way  with  China,  and  illustrative  of  the 
manner  in  which   China  is  being  looted   and  kept  in   financial 
vassalage  to  other  Powers.     The  story  is  difficult  to  understand 
without  the  aid  of  a  map  of  North  China  and  a  knowledge  of  her 
railway  system  and  traffic  problems. 

Dairen  is  the  commercial  stronghold  of  Japan  in  Manchuria 
and  North  China,  from  here  her  merchants  tap  the  wealth  of  the 
vast  hinterland,  and  distribute  their  wares.  A  glance  at  the  map 
will  indicate  that  Dairen  is  only  85  miles  distant  by  sea  from  the 
port  of  Chefoo  in  the  Province  of  Shantung,  which  permits  her 


19 

merchants  to  successfully  compete  in  this  sphere  against  the 
German  entrepot  at  Tsingtau.  An  immense  junk  and  light  draft 
steamer  traffic  was  rapidly  developed  between  Dairen  and  the 
Shantung  coast,  and  trade  established  which  could  not  be  taken 
away  by  Germany.  Dairen  in  time  rivalled  Tsingtau  as  a  distri- 
buting point  for  the  trade  of  the  province,  in  fact  the  Japanese 
port  was  more  favorably  located  than  Tsingtau  to  dominate  the 
richer  part  of  the  Province.  The  shorter  and  cheaper  water  borne 
traffic  cut  into  the  more  expensive  and  longer  railway  haul  from 
Tsingtau  to  the  heart  of  Shantung.  Naturally  neither  Germany 
or  Japan  desired  to  contribute  to  the  commercial  growth  of  ports 
outside  their  control,  and  the  importance  of  the  old  international 
treaty  port  of  Chefoo  was  thereby  impaired.  The  Japanese 
especially  chafed  under  the  forced  necessity  of  contributing  to  the 
enrichment  of  a  port  under  the  jurisdiction  of  China,  where 
European  and  American  interests  had  long  since  secured  control 
of  the  most  profitable  and  choice  business  sites.  The  Japanese 
determined  to  get  along  without  Chefoo  and  build  up  a  port 
entirely  under  their  own  influence.  When  the  breakwater  scheme 
for  the  harbor  of  Chefoo  became  a  certainty,  and  that  its 
cost  would  be  charged  on  the  shipping  and  trade  entering  the 
harbor,  the  Japanese  balked.  When  it  is  known  that  the  Japanese 
flag  floats  over  about  70  per  cent,  of  the  shipping  which  enters 
and  clears  from  the  port  and  that  the  great  bulk  of  this  shipping 
is  engaged  in  the  Dairen  and  Port  Arthur  run,  it  indicates  that 
the  Japanese  trade  between  the  Kwangtung  Peninsula  and  Shan- 
tung would  be  called  upon  to  pay  the  lion's  share  of  the  proposed 
harbor  improvement.  So  Japan  decided  that  Chefoo  was  no 
place  for  her,  and  began  to  look  around  for  a  more  suitable  base 
for  her  trade  expansion  in  Shantung. 

JAPAN'S   WAY    IN    CHINA. 

Seventy-five  miles  to  the  west  of  Chefoo  is  located  the  little, 
obscure  junk  port  of  Lungkow.  Reference  to  the  map  will  dis- 
close that  the  sea  distance  betwen  Dairen  and  Chefoo,  and  Dairen 
and  Lungkow  are  for  all  practical  purposes  the  same,  while 
Lungkow  possessed  the  added  advantage  of  being  located  seventy- 
five  miles  nearer  the  commercial  heart  of  the  province.  No 
foreigners  were  located  there,  no  vested  interests  had  been  es- 
tablished, and  its  remoteness  promised  freedom  from  molestation 


J 


'h 


20 

and  the  prying  eyes  of  foreigners.  So  here  the  Japanese  decided 
to  estabhsh  their  sub-base  for  Dairen  and  exploit  the  province 
in  company  with  the  Germans,  but  safe  from  the  latter's  competi- 
tion. With  characteristic  Japanese  thoroughness  they  prepared 
their  plans  and  proceeded  to  work.  A  Japanese  steamship  line 
to  ply  between  Dairen  and  Lungkow  direct,  and  a  Japanese  Bank 
with  headquarters  in  Dairen  and  a  branch  in  Lungkow,  and  both 
under  the  same  management,  were  subsidized  by  the  Japanese 
Government  of  the  Kwangtung  Leased  Territory  and  commenced 
operations  in  1912.  They  were  the  first  in  the  field,  and  with 
the  aid  of  the  Bank  naturally  acquired  the  choice  business  and 
waterfront  cites,  tapped  the  trade  of  Chefoo  to  and  from  the 
heart  of  the  province,  and  firmly  ingratiated  themselves  with  the 
leading  Chinese  merchants  in  the  district.  They  settled  down  to 
improve  their  opportunity  and  wait  for  a  paternal  and  watchful 
Government  to  further  assist  them.  They  had  not  long  to  wait 
for  action.  In  December  1913,  the  Japanese  Minister  at  Peking 
brought  pressure  to  bear  on  China  to  open  certain  ports  in  Inner 
Mongolia  to  foreign  trade.  Included  in  the  list  was  the  little,  un- 
important and  hitherto  unheard  of  junk  port  of  Lungkow  on  the 
north  coast  of  Shantung.  Even  the  old  China  ''hands"  wondered 
I  what  it  meant,  as  no  one  could  see  the  advantage  of  opening  this 
J  shallow  harbor.  It  was  soon  realized  however  that  Japan  had 
/I  stolen  a  march  on  the  rest  of  the  world,  for  by  the  use  of  her 
light-draft  subsidized  steamers  in  direct  trade  with  Dairen,  the 
port  of  Chefoo  was  isolated,  and  Japanese  products  brought 
seventy-five  miles  nearer  the  commercial  heart  of  the  Province, 
thus  saving  that  expense  of  cart  transportation.  The  commercial 
advantage  of  Lungkow  to  Japan  is  therefore  apparent.  It  gives 
her  a  decided  superiority  over  the  traders  of  other  nations 
established  at  Chefoo,  and  if  ruthlessly  pressed  will  result  in  the 
commercial  ruin  of  Chefoo. 

LUNGKOW'S    STRATEGIC   IMPORTANCE. 

When  the  time  came  for  Japan  to  declare  war  on  Germany 
and  commence  operations  against  Tsingtau,  instead  of  landing 
her  forces  within  a  reasonable  distance  of  the  German  strong- 
hold, she  startled  China  and  the  world,  by  disembarking  her  troops 
at  Lungkow,  180  miles  away  from  her  objective.  This  violation 
of  China's  neutrality  has  been  strenously  defended  by  Japan  and 


21 

the  press  of  the  Alhes,-on  the  grounds  that  Germany  had  set  the 
lead.  Technically  the  position  may  be  correct,  but  all  the  evi- 
dence goes  to  strengthen  the  belief  that  the  violation  of  China's 
neutrahty  by  disembarking  troops  at  Lungkow,  was  as  much  a 
fixed  purpose  of  the  Japanese  General  Staff,  as  the  violation  of 
Belgium  was  premeditated  and  formed  part  of  the  strategy  of 
the  German  General  Staff.  Japan  does  nothing  at  hazard.  She 
takes  no  chances.  Her  plans  are  laid  long  in  advance.  Lungkow 
was  selected  as  Japan's  base  in  the  event  of  a  war  with  Germany 
in  1912,  in  the  same  way  that  future  events  will  disclose  that 
certain  Mexican  incidents  are  not  without  their  significance. 

CHEFOO    TO    BE   ISOLATED. 

The  construction  of  a  railway  between  Chefoo  and  Weihsien 
is  essential  for  the  commercial  rehabilitation  of  this  one  remain- 
ing deep  water  port  in  the  north  under  the  jurisdiction  of  the  |  y 
Chinese  Government.  The  topography  of  the  country  compels  [/ 
such  a  line  to  follow  the  coast,  and  pass  within  a  few  miles  of 
Lungkow.  It  is  seen  therefore  that  Lungkow  holds  the  key  to 
Chefoo's  future  prosperity,  and  that  whoever  controls  Lungkow, 
can  tap  and  divert  the  trade  of  Chefoo.  Naturally,  the  Japanese 
desire  that  the  proposed  railway  should  terminate  at  Lungkow, 
especially  if  their  money  is  to  be  employed  in  its  construction. 
If  Chefoo  wants  a  line  to  connect  with  Lungkow  and  the  interior, 
the  Chefoo  merchants  may  find  the  money  themselves,  but  they  can 
never  have  any  control  over  the  strategic  section  from  Lungkow  to 
Weihsien.  In  plain  words  Chefoo  is  to  be  left  out  in  the  cold. 
This  is  the  ''Ethiopian  gentlemen  in  the  wood-pile"  concealed  in 
Clause  2  of  the  treaty.  If  China  wants  a  railway  in  this  section 
Japan  will  only  finance  it  as  far  as  Lungkow,  from  there  on  to 
Chefoo  it  must  be  a  separate  local  line  with  no  participation  in 
me  administration  of  the  main  section.  Not  alone  does  the  clause 
'conceal  this  attempt  against  the  commercial  prosperity  of  Chefoo, 
but  embraces  one  of  the  most  barefaced  intrigues  for  the  acqui^- 
tion  of  revenues  now  enjoyed  by  the  Chinese  Government  and  j 
constituting  one  of  its  most  valuable  loan  securities. 

LOOTING    CHINAS    TREASURY. 

A  feature  of  conditions  in  North  China  not  generally  under- 
stood consists  in  the  scarcity  of  agricultural  labor  in  Manchuria. 
Hundreds  of  thousands  of  coolies  are  annually  imported  in  the 


>/ 


1 


22 

Spring  from  the  congested  province  of  Shantung  and  returned  to 
their  homes  after  the  harvest.     This  remarkable  passenger  traffic 

('has  been  one  of  the  principal  sources  of  revenue  and  profit  for 
the  Chinese  Government  owned  Peking- Alukden  Railway,  one  of 
the  greatest  revenue  earners  of  the  Government  as  well  as  one 
of  the  most  profitable  railway  enterprises  in  the  world.     Since 
Japan's   acquisition   of   the   South   Manchuria   Railway   she   has 
naturally  set  out  to  divert  and  capture  as  much  of  this  profitable 
business  as  possible.     To  this  end  the  Japanese  Government  has 
[subsidized  steamers  and  other  vessels  to  ply  between  Dairen  and 
the  Shantung  ports,  and  act  as  feeders  to  the  railway.     By  offer- 
ing special  through  rates  from  Shantung  to  the  fields  of  Man- 
/■churia,  they  were  able  to  divert  a  fair  percentage  of  this  lucrative 
i  trade.     Not  content  with  this  they  want  it  all.     If  Japan  secures 
control  of  the  main  German  Railway  from  Tsingtau  to  Tsinan 
through  the  heart  of  the  Province,  and  then  dominates  the  line 
I  from  Weihsien  to  the  port  of  Lungkow,  she  thus  obtains  control 
yof  the  essential  link  in  a  through  Japanese  transportation  system 
from  the  heart  of  Shantung  to  the  uttermost  end  of  South  Man- 
churia.    The  immense  coolie  traffic  which  has  heretofore  passed 
over  and  contributed  to  the  prosperity  of  the  Chinese  Govern- 
ment Railways,  will  be  thus  diverted  to  the  Japanese  system.     In 
other  words,  millions  of  dollars  are  »transf erred  from  the  treasury 
of  the  Chinese  Government  to  the  coffers  of  the  Japanese  Govern- 
ent  controlled  South  Manchuria  Railway  Company,  and  its  allied 
interests.     It  constitutes  one  of  the  most  callous  exhibitions  of 
diplomatic  brigandage  on  record.     The  loss  of  this  great  revenue 
l)y  the  Chinese  Government  line  will  impair  the  value  of  a  security 
pledged  as  the  guarantee  of  important  loans  largely  held  in  Great 
Britain,  in  addition  to  depriving  the  Government  from  the  enjoy- 
ment of  its  legitimate  sources  of  revenue.     There  is  only  one 
I  equitable  solution  to  this,  and  that  is  for  the  Chinese  Government 
j  to  have  full  control  of  the  Shantung  railways  with  authority  to 
I  impose  such  rates,  as  will  protect  its  interests  in  other  quarters. 
I  Otherwise  if  Japan  insists  on  the  right  to  finance  the  line  and 
I  compel  its  termination  at  Lungkow,  it  is  equivalent  to  forcing 
I  the  Chinese  Government  to  borrow  $5,000,(XX)  gold  at  85  at  5 
\  per  cent,  interest,  and  other  perquisites,  in  order  to  create  the 
^  machinery  to  loot  her  treasury  of  at  least  $2,000,000  per  year. 


23 

THE    MANCHURIAN    TREATY. 

The  second  treaty  entered  into  between  China  and  Japan  con- 
sisted of  nine  clauses  relating  to  Manchuria,  the  first  clause  of 
which  reads : — 

When  Russia  obtained  the  concession  in  1896  for  the  Chinese 
Eastern  Railway,  provision  was  made  for  the  reversion  of  the 
property  to  China  after  eighty-five  years,  without  payment,  and 
tTie  right  of  purchase  at  the  expiration  of  thirty-six  years  after 
completion.  As  the  line  was  open  to  traffic  in  1902  this  placed 
the  date  when  China  would  have  the  right  to  pufdrase  the  line, 
in  1938,  or  twenty  three  years  hence.  On  March  27,  1898, 
Russia  further  obtained  from  China  the  lease  of  the  Kwangtung 
Peninsula  for  twenty-five  years  and  the  right  to  construct  the 
South  Manchuria  Railway  under  the  same  terms  as  the  Chinese 
Eastern  line.  Japan's  victory  over  Russia  brought  with  it  succes- 
sion to  the  rights  of  the  South  Manchuria  Railway  and  the  lease 
of  the  Kwantung  Peninsula.  It  will  be  seen  therefore  that  the 
lease  expired  in  1923  or  less  than  eight  years  hence,  while  the 
right  to  controrthe  railway  extended  to  1938.  The  administra- 
tion of  the  railway  is  of  no  political  and  little  commercial  ad- 
vantage to  Japan,  without  an  extension  of  the  lease  in  which  the 
political  control  has  its  basis.  How  to  obtain  China's  free  con- 
sent to  its  extension  before  its  expiration  has  been  one  of  the 
most  difficult  political  problems  confronting  Japanese  statesmen 
for  the  last  few  years.  It  was  recognized  that  if  a  stable  Govern- 
ment was  established  in  China  and  the  country  regained  its  finan- 
cial feet,  and  created  a  modern  army  and  navy,  she  would  never 
willingly  consent  to  an  extension  of  the  lease  without  some  com- 
pensating advantages.  As  long  as  other  Powers  were  loaning 
money  to  China,  and  standing  sponsor  for  her  independence  and 
integrity,  and  urging  her  to  purchase  arms  and  ammunition,  war 
ships  and  other  implements  of  defense,  this  problem  became  a 
nightmare  to  Japan  from  the  political  viewpoint  alone,  as  her 
only  chance  to  maintain  her  hold  in  Manchuria,  meant  that  she 
would  have  to  fight  for  it.  The  question  of  the  extension  of  the 
lease  also  seriously  interfered  with  Japan's  economic  program  in 
Manchuria,  for  after  the  first  few  loans  secured  on  the  railway, 
she  found  it  increasingly  difficult  to  persuade  financiers  to  ad- 
vance further  funds,  because  of  the  short  unexpired  time  of  the 
lease.     This  point  reached   a  climax  five  years  ago,  when  her 


1/ 


24 

overtures  for  a  large  loan  secured  on  the  railway  was  turned 
down  in  the  international  money  markets.  In  fact  the  value  of 
the  railway  as  a  security  for  further  loans  has  ceased  to  exist 
owing  to  the  short  unexpired  terms  of  the  lease. 

JAPAN'S    OVERWHELMING     NECESSITY. 

It  will  be  clearly  seen  that  Japan's  entire  future  in  Manchuria 
was  at  stake  and  hinged  on  her  being  able  to  secure  China's  con- 
sent to  the  extension  of  the  lease,  not  at  its  expiration  in  1923, 
but  immediately.  Those  familiar  with  the  vital  importance  of 
the  situation  have  been  waiting  to  see  just  how  Japan  would 
act,  in  view  of  her  oft  repeated  assurances  of  friendship  for  China, 
and  the  attitude  of  the  other  Powers  towards  the  preservation  of 
China's  sovereignty.  It  has  been  clear  to  all  competent  observers 
that  it  was  far  from  Japan's  intentions  to  deal  honorably  with 
China  and  offer  her  some  quid  pro  quo  for  the  promise  to  ex- 
tend the  lease.     Coercion  was  to  be  applied,  whenever  a  suitable 

retext  could  be  found  or  manufactured.  The  necessity  of  al- 
ways having  some  outstanding  qtiestions  with  China,  and  the 
wisdom  of  constantly  creating  new  sources  of  trouble,  with  an 
eye  to  the  extension  of  the  lease  was  therefore  forced  on  Japan 

s  part  of  her  policy  towards  her  weaker  neighbor.  This  in  part 
accounts  for  her  past  unreasonable  attitude.  Japan  was  simply 
building  up  a  case  that  would  serve  as  the  pretext  for  her 
demands  when  the  opportune  hour  arrived.  Time  after  time  has 
China  been  forced  to  apologize  and  pay  indemnities  to  Japan  on 
the  flimsiest  pretexts,  and  various  trifling  questions  have  been 
deliberately  left  unsettled  so  as  to  form  the  basis  of  "strong"  ac- 
tion when  the  time  became  appropriate.  The  danger  confronting 
China  was  fully  appreciated  by  the  Chinese  Government,  and 
their  readiness  to  comply  at  once  with  Japan's  outrageous  de- 
mands in  these  minor  troubles,  is  explained  by  the  menace  which 
was  always  hidden  in  the  background.  The  war  in  Europe  swept 
away  all  these  contemptible  issues  that  Japan  had  sedulously 
created  to  justify  her  coercion  of  China.  The  big  opportunity 
to  force  Germany  out  was  presented,  and  to  use  the  99  year  lease 
of  Kiaochao  as  the  lever  for  obtaining  China's  consent  to  the 
extension  of  the  Kwantung  lease.  This  was  undoubtedly  Japan's 
purpose  when  she  announced  at  the  outset  of  the  war  with  Ger- 
many that  Kiaochao  would  eventually  be  restored  to  China.     Her 


25 

first  intentions  were  evidently  honest,  but  the  temptation  to  take 
an  unfair  advantage,  was  too  great  to  resist,  and  the  Government 
was  swept  away  by  the  wave  of  jingoism  which  surged  over  the 
Empire  after  the  occupation  of  Tsihgtau. 

Germany's  lease  of  Kiaochao,  Britain's  lease  of  the  Kowloon 
Extension,  and  France's  lease  of  Kwang-chow  Bay,  were  stipu- 
lated at  99  years,  while  Russia  modestly  asked  for  only  25  years 
in  Port  Arthur  and  Dalny.  This  of  course  constituted  a  gross 
violation  of  equal  opportunity  and  a  discrimination  against  Japan, 
which  became  unbearable  when  carried  to  the  extreme  of  acting 
as  an  impediment  to  the  raising  of  funds  for  the  exploitation  of 
the  territory,  when  China  could  so  readily  have  made  it  all  right 
by  an  immediate  consent  to  the  extension  of  the  lease. 

JAPAN'S     "BENIGN"     POLICY. 

There  has  been  so  much  praise  in  America  of  Japan's  benign 
policies  in  China,  by  those  unfamiliar  with  the  real  trend  of 
political  currents  in  the  Orient,  and  ignorant  of  the  fundamental 
issues,  that  I  desire  to  emphasize,  at  the'  risk  of  tiresome  reitera- 
tion, the  imperative  economic  necessity  of  Japan  in  forcing 
China's  immediate  consent  to  the  extension  of  the  lease  of  the 
Kwarrgtung  Peninsula.  If  the  European  war  had  not  provided 
the  opportunity,  the  issue  would  have  been  forced  on  China  as 
the  outcome  of  the  many  so-called  outstanding  "troublesome 
questions"  deliberately  created  and  allowed  to  hang  over  by  Japan 
so  as  to  provide  the  necessary  face  saving  pretext  for  the  grand 
coup.  If  real  friendship  for  China  existed  in  Japan,  or  any 
desire  to  be  just,  a  way  would  have  been  found  to  approach  China 
openly  and  honorably  with  some  offer  of  compensating  advantages 
in  exchange  for  the  valuable  privileges  embraced  in  the  extension 
of  the  lease.  The  Chinese  Government  although  reluctant  to 
perpetuate  these  symbols  of  her  impotence,  would  have  met  Japan 
half  way  in  any  friendly  overtures  based  on  a  recognition  of  her 
sovereign  rights  and  the  laws  of  equity  and  justice. 

Japan's  financial  position  was  desperate.  The  country  was 
overburdened  with  debt.  She  had  no  remaining  domestic  assets 
to  serve  as  the  security  for  further  large  loans.  Her  rich  Man- 
churian  properties  were  valueless  for  raising  funds  because  of 
the  short  term  of  the  lease.     True,  the  railway  would  have  re- 


X 


¥ 


26 

mained  under  her  control  until  1938,  but  its  commercial  value 
would  have  been  greatly  impaired  without  political  control  of 
the  deep  water  terminals  at  Dairen  and  the  fortress  of  Port 
Arthur.  China  would  never  have  meekly  consented  beforehand 
to  the  extension  of  the  lease  without  some  reciprocal  advantage, 
and  as  Japan's  policy  never  contemplated  any  such  honorable 
offer,  the  coveted  concession  was  to  be  extracted  by  force. 

Is  this  action  on  a  par  zuith  Germany's  much  censured  and  con- 
demned application  of  the  Mailed  Fist  at  Kiaochao,  or  does  it 
stand  apart  as  a  glowing  tribute  to  Japan  s  altruism  and  expres- 
sion of  good  will  and  honorable  intentions  towards  China? 


27 


JAPAN'S  OFFICIAL  COMMUNIQUE 


Issued  by  the  Japanese  Government  from  Tokio  on  May  7  and 
Circulated  by  Reuter's  Telegraph  Agency 


The  Imperial  Government  have,  in  the  demands  lately  pre- 
sented to  the  CTiTnese  Government,  made  it  the  main  object  to 
adjust  matters  to  meet  the  new  situation  created  by  the  war 
between  Japan  and  Germany  and  to  bring  closer  the  friendly 
relations  subsisting  between  Japan  and  China  and  thus  ensure 
the  permanent  peace  of  the  Far  East.  In  formulating  these  de- 
mands, they  have  taken  sj)ecial  care  t^avoid  those  which  might 
have  been  deemed  to  conflict  with  tlie~"pnnciples  of  territorial 
integrity,  equal  opportunity  andThe  open  door,  which  Japan  has, 
from  time  to  time,  declared  to  the  Powers  in  regard  to  China. 
Accordingly  these  demands  include  among  others  those  relating 
to  the  disposition  of  German  rights  in  Shantung,  those  relating 
to  the  recognition  of  the  special  position  and  interests  of  Japan 
in  South  Manchuria  and  Eastern  Inner  Mongolia,  and  those  re- 
lating to  the  solution  of  various  questions  which  for  many  years, 
have  been  pending  between  the  Japanese  and  Chinese  Govern- 
ments. 

Group  I.  Contains-  demands  relating  to  the  Province  of  Shan- 
tung. 

The  first  article  demands  an  engagement  on  the  part  of  China 
to  consent  to  all  matters  which  may  be  agreed  upon  between  the 
Japanese  Government  and  the  German  Government  with  regard 
to  the  disposition  of  all  rights,  interests  and  concessions  which 
in  virtue  of  treaties  or  otherwise  Germany  possesses  in  relation 
to  the  Province  of  Shantung. 

The  second  article  demands  an  engagement  on  the  part  of 
China  not  to  alienate  or  lease  to  another  Power  the  Province  of 
Shantung  or  any  portion  of  it  or  any  island  lying  near  the  coast 
of  the  said  Province. 

Article  3.  China  shall  grant  to  Japan  the  right  of  construc- 
tion of  a  railway  connecting  Chefoo  or  Lungkou  with  the 
Tsinanfu-Kiaochau  Railway. 


28 

Article  4.  The  Chinese  Government  shall  open  the  principal 
cities  of  the  province  of  Shantung  for  the  residence  and  trade  of 
foreigners. 

Group  II.  Contains  demands  relating  to  South  Manchuria  and 
Eastern  Inner  Mongolia.  The  first  article  demands  the  extension 
of  the  terms  of  lease  of  Port  Arthur  and  of  the  South  Manchuria 
and  Antung-Mukden  Railways  to  a  period  of  ninety-nine  years. 
The  second  article  demands  that  Japanese  subjects  shall  be  per- 
mitted to  lease  or  own  land  necessary  either  for  erecting  buildings 
of  various  kinds  for  commercial  and  industrial  uses  or  for  agri- 
cultural purposes.  The  third  article  demands  that  Japanese  sub- 
jects shall  be  permitted  to  reside,  travel  and  carry  on  business 
of  various  kinds,  commercial,  industrial  or  otherwise.  The  fourth 
article  demands  that  Japanese  subjects  shall  be  granted  the  min- 
ing rights  of  certain  specified  mines.  The  fifth  article  demands 
that  the  consent  of  the  Japanese  Government  shall  be  obtained  in 
advance  when  China  proposed  to  grant  a  railway  concession  to 
subjects  of  a  third  power  or  to  procure  a  supply  of  capital  from 
a  third  power  for  the  construction  of  a  railway  or  to  raise  a  loan 
from  such  power  on  the  security  of  duties  or  taxes.  The  sixth 
article  demands  that  the  Japanese  Government  shall  be  consulted 
before  the  engaging  of  advisers  or  instructors  regarding  political, 
financial  or  military  matters.  Article  seven  demands  that  the 
management  and  control  of  the  Kirin-Changchun  Railway  shall 
be  transferred  to  Japan  for  the  term  of  ninety-nine  years. 

Group  III.  Contains  demands  relating  to  the  Hanyehping 
Company.  The  first  article  demands  that  having  regard  to  the 
close  relations  between  Japanese  capitalists  and  this  Company, 
the  Chinese  Government  shall  agree  to  the  placing  of  the  Com- 
pany under  joint  Japanese  and  Chinese  management  and  not  to 
dispose  or  permit  the  Company  to  dispose,  without  the  consent 
of  Japan,  any  rights  or  property  belonging  to  the  Company.  The 
second  article  demands  that  owing  to  the  necessity  for  the  pro- 
tection of  the  interests  of  Japanese  capitalists,  the  Chinese 
Government  shall  engage  not  to  permit,  without  the  consent  of 
the  Company,  any  one  other  than  the  Company  to  work  mines 
situated  in  the  neighborhood  of  those  belonging  to  the  Company 
and  also  to  obtain  previous  consent  in  case  it  is  proposed  to  take 
measures  which  may  be  deemed  to  aflfect  the  Company  directly 
or  in(^irectly. 


29 

Group  IV.  Contains  demands  relating  to  the  non-alienation  of 
the  coast  of  China  or  islands  off  the  coast.  The  Chinese  Govern- 
ment shall  engage  not  to  alienate  or  lease  to  a  third  Power  any 
ports  or  bays  on,  or  islands  off,  the  coast  of  China. 

Group  V.  Propositions  relating  to  the  solution  of  pending 
questions  and  others. 

Article  1.  The  Central  Chinese  Government  must  engage  in- 
fluential Japanese  as  political,  financial  and  military  advisers. 

Article  2.  The  Chinese  Government  must  recognise  the  right 
of  Japanese  to  land  fdr  building  Japanese  hospitals,  temples  and 
schools  in  the  interior  of  China. 

Article  3.  The  police  in  localities  where  such  arrangements 
are  necessary  must  be  placed  under  joint  Japanese  and  Chinese 
administration,  or  else  Japanese  must  be  employed  as  police 
officers  in  such  localities. 

Article  4.  China  must  obtain  from  Japan  a  supply  of  a  certain 
quantity  of  arms,  or  else  must  establish  arsenals  in  China,  under 
joint  Japanese  and  Chinese  management,  and  these  must  be 
supplied  with  experts  and  material  from  Japan. 

Article  5.  Japan  must  be  given  the  right  to  construct  a  rail- 
way connecting  Wuchang  with  the  Kiukiang-Nanchang  line  and 
with  the  Nanchang-Hangchow  railways. 

Article  6.  In  view  of  the  relations  between  the  province  of 
Fukien  and  Formosa  and  the  agreement  respecting  the  non- 
alienation  of  Fukien,  Japan  must  be  consulted  whenever  foreign 
capital  is  needed  in  connection  with  railways,  mines  and  harbor 
works,  including  dockyards. 

Article  7.  The  Chinese  Government  must  recognise  the  right 
of  preaching  by  the  Japanese  in  China. 

With  regard  to  the  province  of  Shantung,  China  absolutely 
lacks,  it  is  clear,  in  her  present  condition,  the  power  to  prevent 
Germany  from  recovering  her  influence  in  that  province  and 
from  becoming  in  future  again  a  source  of  disturbance  in  the 
Far  East.  It  is,  therefore,  natural  that  Japan,  who  has  at  great 
sacrifice  driven  Germany  out  of  Shantung,  should  present  the 
above-mentioned  demands,  in  order  to  consider  how  the  rights 
possessed  by  Germany  should  be  disposed  of,  and  to  take  meas- 
ures to  prevent  the  recrudescence  of  German  influence. 

Japan's  relations  with  Manchuria  have  always  been  especially 


30 

close  geographically,  politically  and  from  the  point  of  view  of 
commercial  and  industrial  interests.  Since  those  relations  have 
been  strengthened  by  two  successive  wars  the  predominant  posi- 
tion of  Japan  in  that  region  has  been  recognised  both  at  home 
and  abroad. 

The  case  is  almost  similar  in  regard  to  Eastern  Inner  ^longolia. 
Further  for  the  advancement  of  the  intimate  relations  existing 
between  Japan  and  China,  no  effort  should  be  spared  to  solve 
definitely  on  this  occasion  all  pending  questions  which  are  likely 
to  lead  to  difficulties  with  China  and  at  the  same  time  to  make 
an  agreement  with  a  view  to  prevent  future  misunderstandings. 
The  Japanese  Government,  fully  expecting  that  the  Chinese 
Government  would  value  the  friendly  sentiments  existing  between 
the  two  countries  and  willingly  accede  to  the  Japanese  proposals, 
urged  them  to  carry  these  matters  into  effect,  whereas,  in  other 
matters  China's  consent  was  demanded  by  reason  of  treaty  and 
other  rights. 

With  regard  to  the  demands,  which  were  formulated  after  care- 
ful and  mature  consideration,  on  the  basis  of  the  principles  above 
referred  to,  the  Chinese  Government,  in  disregard  of  the  under- 
standing which  was  made  at  the  commencement  of  the  negotia- 
tions to  keep  the  proceedings  of  the  conferences  strictly  secret, 
made  public  the  Japanese  proposals,  in  various  exaggerated  forms 
and  endeavored  to  stir  up  the  feelings  of  the  Powers  against 
Japan.  They  caused  the  matters  discussed  at  the  conferences  to 
be  published  invariably  in  the  newspapers,  wnth  a  view  to  hinder- 
ing the  progress  of  the  negotiations ;  by  fabricating  news  detri- 
mental to  Japan  and  they  attempted  to  shake  the  confidence 
placed  by  her  ally  in  Japan.  They  even  demanded  the  tmcondi- 
tional  retrocession  of  Kiaochow  and  an  indemnity  for  the  damage 
caused  by  the  war  between  Japan  and  Germany,  and  thus  they 
showed  from  the  first  a  lack  of  a  sincere  desire  for  a  satisfactory 
conclusion  of  the  negotiations.  Moreover,  although  the  Japanese 
Government  fully  showed  its  sincerity  by  repeatedly  explaining 
the  motives  of  the  demands  and  endeavored  to  hear  China's  un- 
reserved views  on  the  matter,  it  is  an  undeniable  fact  that  the 
Chinese  authorities  failed  to  appreciate  the  friendly  attitude  of 
Japan  and  persisted  in  protracting  the  negotiations.  Twenty-five 
conferences  were  held  in  all,  extending  over  more  than  three 
months  and  throughout  these  conferences  the  Japanese  Govern- 


31 

ment  exhausted  every  means  of  arriving  at  a  satisfactory  solution, 
but  the  Chinese  Government,  although  they  showed  a  disposition 
to  agree  to  the  demands  relating  to  the  province  of  Shantung, 
yet  with  regard  to  South  Manchuria  put  various  restrictions  upon 
the  most  important  demands,  namely  those  relating  to  the  rights 
regarding  land  tenure  and  objected  to  those  relating  to  Eastern 
Inner  Alongolia  and  various  questions  enumerated  under  Group 
V.  on  the  ground  that  they  were  derogatory  to  the  sovereign 
rights  of  China  or  conflicted  with  treaties  with  other  Powers  and, 
although  the  Japanese  ^Minister  explained  that  such  was  not  the 
case,  they  refused  to  listen.  But,  recognising  that  a  satisfactory 
conclusion  of  the  negotiations  was  most  important  for  the  main- 
tenance of  peace  of  the  Far  East,  the  Japanese  Government 
treated  the  Chinese  contentions  with  every  consideration,  making 
very  great  concessions.  In  a  spirit  of  conciliation  they  amended^ 
their  proposals  and  presented  their  revised  draft  to  the  Chinese 
Government  on  April  26.  In  the  revised  draft  the  contentions 
put  forward  by  the  Chinese  Government  were  taken  into  con- 
sideration. In  this  draft,  as  regards  Eastern  Inner  Mongolia, 
the  demands  were  confined,  for  the  present,  to  absolutely  neces- 
sary matters ;  those  relating  to  the  Hanyehping  Company  were 
confined  to  matters  which  had  been  admitted  by  the  Chinese 
Government  at  the  conferences.  As  regards  the  demand  re- 
specting the  non-alienation  of  the  coast,  the  form  desired  by  the 
Chinese  was  accepted.  The  proposals  relating  to  advisers,  owner- 
ship of  land  for  schools  and  hospitals,  and  the  position  of  the 
province  of  Fukien  were  all  altered  in  accordance  with  the  views 
expressed  by  the  Chinese  representatives  at  the  conferences.  As 
regards  South  China  railways,  the  relations  with  third  parties 
esoecially  were  respected  and  alterations  were  made  accordingly. 
The  question  of  the  right  of  preaching  was  reserved  for  future 
negotiations.  Those  relating  to  police  and  the  ownership  of  sites 
for  temples  were  withdrawn. 

More  Articles  Added  in  Revised  Draft 

The  revised  draft  is  therefore  practically  as  follows : — 
Group  II.     Eastern  Inner  ^Mongolia  is  excluded  from  the  pro- 
posals respecting  South  Manchuria  and  Eastern  Inner  Mongolia 
and  the  second  and  third  articles  are  amended  as  follows : 

Article  2.     Japanese  subjects  shall  be  permitted  in  the  region 


32 

of  South  Manchuria  to  lease  or  buy  land  necessary  for  erecting 
buildings,  of  various  kinds  for  commercial  and  industrial  uses 
or  for  agricultural  purposes. 

Article  3.  Japanese  subjects  shall  have  liberty  to  enter,  travel 
and  reside  in  the  region  of  South  Manchuria  and  carry  on  busi- 
ness of  various  kinds,  commercial,  and  industrial,  and  otherwise. 

The  fourth  article,  referring  to  the  preceding  two  provisions, 
says  that  Japanese  subjects  shall  produce  before  the  Chinese 
local  authorities  passports  duly  issued  and  registered  by  the  said 
authorities.  They  shall  also  observe  Chinese  police  laws  or  regu- 
lations approved  by  the  Japanese  consuls  and  pay  to  the  Chinese 
authorities  taxes  approved  by  the  Japanese  consuls.  In  civil, 
original  suits  the  Japanese  consul,  where  a  Japanese  subject  is 
defendant,  and  a  Chinese  official,  where  a  Chinese  is  defendant, 
shall  respectively  try  and  decide  the  case,  both  the  Japanese  consul 
and  the  Chinese  official  being  permitted  each  to  send  an  authorized 
agent  to  attend  the  trial  and  watch  proceedings,  provided  that  in 
a  civil  suit  concerning  land  between  Japanese  and  Chinese  the 
case  shall  be  examined  and  decided  jointly  by  the  Japanese  consul 
and  a  Chinese  official  according  to  the  laws  and  local  customs  of 
China,  provided  further  that  in  future  when  the  judicial  system 
in  the  said  region  shall  be  completely  reformed  all  civil  and  crimi- 
nal suits  involving  Japanese  subjects  shall  be  wholly  tried  and 
decided  by  Chinese  courts. 

Proposals   relating  to   Eastern   Inner   Mongolia: — 

The  first  article  demands  that  China  shall  permit  joint  enter- 
prises of  Japanese  and  Chinese  in  agricultural  and  auxiliary  in- 
dustries, the  second  that  China  shall  consult  Japan  first  in  case 
China  contemplates  contracting  either  railway  loans  or  secured 
by  taxes,  and  the  third  that  China  shall  increase  the  number  of 
open  markets. 

Group  III.  As  regards  the  Hanyehping  Company  the  Chinese 
Government  shall  engage  to  approve  of  an  agreement  that  may  be 
concluded  in  future  between  the  Company  and  Japanese  capital- 
ists for  a  joint  undertaking,  and  agrees  not  to  confiscate  it  nor 
to  nationalise  it  without  the  consent  of  interested  Japanese  capital- 
ists and  not  to  permit  it  to  contract  any  foreign  loan  with  other 
than  Japanese. 


33 

Group  IV.  As  regards  the  non-alienation  of  Chinese  coasts, 
the  Japanese  Government  will  be  satisfied  with  the  declaration 
as  suggested  by  the  Chinese  Government. 

Group  V.  As  to  the  other  points  the  following  shall  be  kept 
on  record : 

Article  1.  That  the  Chinese  Government  will  in  case  of  neces- 
sity in  future  employ  Japanese  advisers. 

Article  2.  In  case  Japanese  subjects  desire  to  lease  or  pur- 
chase land  for  the  purpose  of  building  schools  or  hospitals  in  the 
interior,  the  Chinese  Government  will  permit  them  to  do  so. 

Article  3.  The  Chinese  Government  will  some  day  in  the 
future  send  military  officers  to  Japan  in  order  to  make  arrange- 
ments directly  with  the  Japanese  military  authorities  either  for 
the  purchase  of  arms  from  Japan  or  for  establishing  an  arsenal 
f  ?  arsenals]  in  China  under  Sino- Japanese  management. 

Article  4.  The  Chinese  Government  will  grant  Japan  her  de- 
sired railway  concession  in  South  China  in  case  it  becomes  clear 
that  there  is  no  objection  in  this  respect  on  the  part  of  any  other 
Power,  or  that  the  Chinese  Government  will  refrain  from  enter- 
ing into  any  agreement  with  any  other  party  concerning  the  rail- 
way lines  in  question  until  Japan  may,  independently  of  the  pres- 
ent negotiations  with  China,  reach  an  agreement  with  the  party 
whose  interests,  in  the  opinion  of  the  Chinese  Government,  are 
opposed  to  the  proposed  lines. 

Article  5.  The  question  of  freedom  for  preaching  by  Japanese 
missionaries  will  be  left  over  for  future  discussion. 

The  proposal  for  joint  administration  of  police  is  withdrawn. 

As  to  Fukien  province  the  Chinese  Government  must  engage  in 
some  form  that  they  will  not  grant  to  any  other  power  the  right 
to  build  a  shipyard,  coaling  or  naval  stations,  or  any  other  military 
establishment  on  or  along  the  coast  of  Fukien  province,  and 
further,  that  the  Chinese  Government  will  not  allow  any  such 
establishment  to  be  built  with  any  foreign  capital  on  the  coast  of 
the  said  province. 


34 

At  the  same  time  as  the  presentation  of  the  revised  draft,  the 
Japanese  Government  declared  to  the  Chinese  Government  that 
if,  at  any  peace  conference  upon  the  conchision  of  the  present 
war,  Japan  should  be  given  the  free  disposal  of  Kiaochow  which 
she  acquired  at  enormous  sacrifice,  she  would  return  it  to  China 
subject  to  certain  conditions,  of  which  the  principal  ones  were 
as  follows : 

The  opening  of  Kiaochow  Bay  as  a  commercial  port. 
The  establishment  of  a  Japanese  concession  in  a  locality  desig- 
nated by  the  Japanese. 

The  establishment,  if  required  by  the  Powers,  of  an  inter- 
national settlement  and  arrangements  between  the  Japanese  and 
Chinese  Governments  regarding  the  disposal  of  the  German 
public  structures  and  properties. 

Germany  having  after  many  years  labour  and  heavy  expenditure 
of  money  converted  Kiaochow  into  an  important  military  and  com- 
mercial port,  as  the  basis  of  her  expansion  in  the  East,  German 
influence  in  this  part  of  China  grew  with  the  development  of 
Kiaochow  and  became  so  firmly  established  that  it  was  utterly 
hopeless  for  China,  singlehanded,  to  regain  possession  of  the 
leased  territory.  Japan,  desiring  to  remove  this  source  of  danger, 
which  might  in  future  again  disturb  the  peace  of  the  Far  East, 
captured  it  at  no  small  cost  of  life  and  money,  and  now  that  it 
is  in  her  hands,  she  is  almost  at  liberty  to  dispose  of  it  at  will. 
She  is  certainly  under  no  obligation  to  return  it  to  China,  but 
she  offered  of  her  own  will  to  return  Kiaochow  because  she  was 
anxious  to  promote  friendly  relations  with  China  and  to  maintain 
the  general  peace  of  the  Far  East.  The  Chinese  Government 
have,  however,  failed  to  reciprocate  Japan's  sentiment  of  accom- 
modation and  conciliation,  and  on  May  1,  presented  a  counter- 
draft  which  they  declared  to  be  their  final  answer. 

In  this  counter-draft,  the  Chinese  Government  recognise  with 
regard  to  South  Manchuria  the  right  of  residence,  trade  and  leas- 
ing land  by  Japanese  subjects  in  the  interior,  but  refuse  to  grant 
long  leases. 

The  Chinese  Government  also  demand  that  Japanese  subjects 
shall  submit  to  Chinese  police  laws  and  regulations,  be  liable  to 


35 

the  same  taxes  and  duties  as  Chinese,  and  all  actions  arising  out 
of  land  disputes,  whether  between  Japanese  and  Chinese,  or  be- 
tween Japanese  themselves,  shall  come  under  the  jurisdiction  of 
Chinese  courts. 

As  regards  Eastern  Inner  Mongolia,  they  put  limitations  on 
the  extent  of  that  region  and  refuse  to  permit  the  main  point  of 
the  Japanese  demand,  which  is  the  joint  enterprise  of  Japanese 
and  Chinese  in  agriculture  and  auxiliary  industries. 

Further  they  demand  at  the  same  time  the  unconditional  sur- 
render of  the  leased  territory  at  Kiaochow,  and  the  recognition 
of  the  right  of  the  Chinese  Government  to  participate  in  the  com- 
ing peace  negotiations  between  Japan  and  Germany. 

Indemnification  by  Japan  for  all  losses  suffered  by  China  in  con- 
sequence of  the  Japan-German  war. 

The  immediate  removal  of  various  military  establishments  of  the 
Japanese  army  and  the  prompt  evacuation  of  occupied  territory. 

They  also  refused  all  the  proposals  contained  in  Group  V.  of 
the  Japanese  amended  project  except  that  relating  to  Fukien.  In 
this  counter-draft  the  Chinese  Government,  still  further  in  dis- 
regard of  responsible  statements  made  by  their  representatives 
at  the  conferences,  revived  in  some  cases  articles  which  had  al- 
ready been  withdrawn  and  in  others  made  alterations  in  matters 
which  were  agreed  to.  Moreover,  they  make  demands  to  which 
it  is  clearly  imposssible  for  Japan  to  accede,  such  as  those  for 
the  unconditional  surrender  of  Kiaochow  and  indemnification  for 
losses  incurred  through  the  Japan-German "  war.  Furthermore, 
the  Chinese  Government  declare  that  their  counter-draft  formu- 
lates their  final  decision.  Accordingly,  so  long  as  Japan,  refuses 
to  accede  to  these  demands  whatever  agreement  may  have  been 
arrived  at  on  other  points  must  ultimately  be  abortive  and  the 
terms  offered  by  China  prove  illusory.  The  Japanese  Govern- 
ment deeply  regret  to  perceive  from  the  attitude  of  the  Chinese 
Government  that  it  is  no  longer  any  use  to  continue  the  present 
negotiations.  Nevertheless,  being  desirous,  with  a  view  to  the 
maintenance  of  peace  in  the  Far  East,  to  make  every  effort  to 
bring  the  negotiations  to  a  satisfactory  conclusion  and  thus  to 
avoid  complications  in  the  situation,  the  Japanese  Government, 
taking  fully  into  account  the  wishes  of  the  Chinese  Government, 


36 

decided  with  great  forbearance,  to  leave  out  of  the  present 
negotiations  and  reserve  for  future  discussion  all  items  spec- 
ified in  Group  V.  of  the  amended  draft,  except  that  relating  to 
Fukien,  about  which  an  agreement  has  been  reached.  The 
Japanese  Government  instructed  their  Minister  at  Peking  on 
May  6th  that,  in  conveying  this  decision  to  the  Chinese  Gov- 
ernment he  should  earnestly  advise  them  to  give  due  regard  to 
Japan's  sentiment  of  accommodation  and  conciliation  and  ex- 
press after  careful  consideration  their  assent  without  delay  to 
the  Japanese  amended  draft  and  at  the  same  time  announce 
that  the  Japanese  Government  expect  from  the  Chinese  Gov- 
ernment a  satisfactory  response  to  this  advice  not  later  than 
six  p.  m.  on  9th  May. 


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